By MARTIN CRUTSINGER, Associated Press Read Comments-->11/29/2007 -->
WASHINGTON -- Hit by a severe credit crunch, existing home sales fell for the eighth straight month with median home prices dropping by a record amount.
The National Association of Realtors reported Wednesday that sales of existing homes dropped by 1.2 percent last month to a seasonally adjusted annual rate of 4.97 million units. That represented the slowest sales pace on record going back to 1999 and was 20.7 percent below activity a year ago.
The median price of a home sold last month, the point where half the homes sold for more and half for less, declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record.
The October weakness was blamed on the fallout from a serious credit crunch that roiled financial markets in August. Banks and other lenders have tightened credit standards in response to a soaring level of defaults, especially on subprime mortgages -- loans provided to borrowers with weak credit histories.
Analysts predicted that prices will have to drop further to work down historic levels of unsold homes. They said the housing slump could last for another year.
"The light at the end of the housing meltdown tunnel appears to be an oncoming train," Joel Naroff, an economist with Naroff Economic Advisors, said in response to the new figures. "With so many choices and so few buyers, the median price is cratering."
Wall Street, however, took the latest bad news on housing in stride, preferring to focus instead on comments from Federal Reserve Vice Chairman Donald Kohn that were interpreted as offering the hope of further Fed rate cuts.
Kohn said the central bank would need to be "nimble" in setting monetary policy. He noted in a speech in New York that the recent financial market turbulence had undone some of the improvements that had been seen and increased the risk of "especially adverse outcomes" for the economy.
Thursday, November 29, 2007
Price drops are sobering, but the big picture is still rosy
By Kenneth R. Harney, Washington Post Writers Group November 18, 2007
WASHINGTON -- With the daily din of bad news about housing, it's easy to lose sight of some larger economic realities: Despite declining prices in many markets, homeowners still control near-record equity holdings, just under $11 trillion.In its latest quarterly "flow of funds" statistical report, the Federal Reserve calculated that U.S. homeowners' equity accounts totaled $10.9 trillion by mid-2007. That was the net difference between total mortgage debt ($10.1 trillion) and the total market value of residential real estate (about $21 trillion).The second-quarter equity number was down about $6 billion from the first quarter of the year but was $48 billion higher than it was at the end of 2006. In other words, there's no question that equity holdings have declined this year and may well be lower when the Fed issues its next quarterly report in mid-December. But in an $11-trillion marketplace, a $6-billion giveback in a cyclical correction is not a cause for panic.A similar, localized reality affects dozens of metro markets that saw double-digit appreciation rates during the boom years. Prices are off 4.4% on average among 20 major markets covered by the latest Standard & Poor's/Case-Shiller home-price index. But if prices more than doubled as they did in 33 metropolitan markets between 2001 and 2006, according to federal estimates, even 10% and higher average price drops in once-booming areas of California and Florida have left long-term owners with most of their paper gains intact.Earlier this month, in the Fort Myers area of southwest Florida, where average home prices jumped 130% between 2001 and 2006, a taxi driver told me that he bought a house for $234,000 four years ago and turned down an offer for $439,000 in early 2006. Now he figures he can't get more than $379,000 for it -- a $60,000 drop in value in a year and a half. But he figures he's still ahead by $145,000 and has more than $150,000 in equity.His estimates of gain may be optimistic -- he didn't factor in his costs of ownership, such as mortgage payments, taxes, insurance, improvements and the like. But his basic conclusion is probably correct. Even with the price declines that have racked the area, he's well ahead.Similar stories are commonplace in many parts of the country, with two large exceptions: People who bought close to the peak of the boom -- and thus weren't in the house long enough to reap advantages from double-digit appreciation -- may now be in negative-equity territory. Add to that homeowners in unemployment-ravaged communities, especially in the industrial Midwest, where foreclosures are pulling entire neighborhoods' house values down and destroying equity built up over years.Many of these stories affect consumers' perspectives on what's happening in housing. But as sobering as they are, they are not the predominant reality in real estate across the country.For the vast majority of owners, the giveback has been a modest fraction of the price gains of the previous five years.Citing Case-Shiller index data, Brian Catalde, president of the National Assn. of Home Builders, says home prices in Los Angeles fell 5.7% in the last 12 months but are up a net 88.9% since 2002. Phoenix prices were down by 8% in 12 months, according to the Case-Shiller index, but were up by a net 80.2% between 2002 and 2007. And, of course, there are dozens of metropolitan home markets that never were touched by the boom's excesses and have not seen price drops at all.Examples include Dallas, where homes gained by an average of just 17.8% in value during the boom years of 2001 to 2006, according to the Office of Federal Housing Enterprise Oversight's home price index. But from mid-2006 through mid-2007, Dallas house prices gained 5%. Add in swaths of the country from the Pacific Northwest to parts of North Carolina, Tennessee, Utah and Rocky Mountain states where house prices continue to gain moderately, and you begin to see the bigger picture.Bottom line: The housing price correction cycle continues in many -- not all -- parts of the country. But in the absence of a recession or major capital markets crisis, most homeowners' equity stakes are intact.
WASHINGTON -- With the daily din of bad news about housing, it's easy to lose sight of some larger economic realities: Despite declining prices in many markets, homeowners still control near-record equity holdings, just under $11 trillion.In its latest quarterly "flow of funds" statistical report, the Federal Reserve calculated that U.S. homeowners' equity accounts totaled $10.9 trillion by mid-2007. That was the net difference between total mortgage debt ($10.1 trillion) and the total market value of residential real estate (about $21 trillion).The second-quarter equity number was down about $6 billion from the first quarter of the year but was $48 billion higher than it was at the end of 2006. In other words, there's no question that equity holdings have declined this year and may well be lower when the Fed issues its next quarterly report in mid-December. But in an $11-trillion marketplace, a $6-billion giveback in a cyclical correction is not a cause for panic.A similar, localized reality affects dozens of metro markets that saw double-digit appreciation rates during the boom years. Prices are off 4.4% on average among 20 major markets covered by the latest Standard & Poor's/Case-Shiller home-price index. But if prices more than doubled as they did in 33 metropolitan markets between 2001 and 2006, according to federal estimates, even 10% and higher average price drops in once-booming areas of California and Florida have left long-term owners with most of their paper gains intact.Earlier this month, in the Fort Myers area of southwest Florida, where average home prices jumped 130% between 2001 and 2006, a taxi driver told me that he bought a house for $234,000 four years ago and turned down an offer for $439,000 in early 2006. Now he figures he can't get more than $379,000 for it -- a $60,000 drop in value in a year and a half. But he figures he's still ahead by $145,000 and has more than $150,000 in equity.His estimates of gain may be optimistic -- he didn't factor in his costs of ownership, such as mortgage payments, taxes, insurance, improvements and the like. But his basic conclusion is probably correct. Even with the price declines that have racked the area, he's well ahead.Similar stories are commonplace in many parts of the country, with two large exceptions: People who bought close to the peak of the boom -- and thus weren't in the house long enough to reap advantages from double-digit appreciation -- may now be in negative-equity territory. Add to that homeowners in unemployment-ravaged communities, especially in the industrial Midwest, where foreclosures are pulling entire neighborhoods' house values down and destroying equity built up over years.Many of these stories affect consumers' perspectives on what's happening in housing. But as sobering as they are, they are not the predominant reality in real estate across the country.For the vast majority of owners, the giveback has been a modest fraction of the price gains of the previous five years.Citing Case-Shiller index data, Brian Catalde, president of the National Assn. of Home Builders, says home prices in Los Angeles fell 5.7% in the last 12 months but are up a net 88.9% since 2002. Phoenix prices were down by 8% in 12 months, according to the Case-Shiller index, but were up by a net 80.2% between 2002 and 2007. And, of course, there are dozens of metropolitan home markets that never were touched by the boom's excesses and have not seen price drops at all.Examples include Dallas, where homes gained by an average of just 17.8% in value during the boom years of 2001 to 2006, according to the Office of Federal Housing Enterprise Oversight's home price index. But from mid-2006 through mid-2007, Dallas house prices gained 5%. Add in swaths of the country from the Pacific Northwest to parts of North Carolina, Tennessee, Utah and Rocky Mountain states where house prices continue to gain moderately, and you begin to see the bigger picture.Bottom line: The housing price correction cycle continues in many -- not all -- parts of the country. But in the absence of a recession or major capital markets crisis, most homeowners' equity stakes are intact.
'No Real Positive News' Seen as Home Prices Continue to Fall
Washington Post (11/28/07) P. D2; Merle, RenaeReports issued on Nov. 27 show ongoing decreases in home prices and lead some analysts to believe the housing downturn is getting worse. The Federal Housing Finance Board reported a 3.5-percent drop in the average single-family home price to $295,573 from $309,258 during the year-over-year period ended in October. Additionally, the Standard & Poor's/Case-Shiller Home Price Index revealed a decline in residential values in the third quarter of 1.7 percent from the second quarter--marking the biggest plunge in the index's 20-year history--and 4.5 percent from the 2006 third quarter. "Most of the metro areas continue to show declining or decelerating returns on both an annual and monthly basis," said MacroMarkets economist Robert Shiller. Experts, many of whom believe home-price drops will extend into next year, are watching closely for an upcoming report on home prices from the Office of Federal Housing Enterprise Oversight.
Home Building Rises Slightly, But Weakness Lingers
Wall Street Journal (11/21/07) P. A2; Evans, KellyThe U.S. Commerce Department reports that new home construction ramped up 3 percent to a seasonally adjusted annual rate of 1.229 million units in October from September, the first month-to-month gain since June of this year. However, researchers downplayed the improvement, noting that the increase was driven completely by construction of multifamily buildings with five or more units. Activity in that sector skyrocketed 47 percent during October after plunging 36 percent a month earlier. Construction of new single-family residences, a better gauge of the overall housing market, sank 7.3 percent in October from the month before to a seasonally adjusted annual rate of 884,000 units. Meanwhile, building permits for new residential units decreased 6.6 percent last month to a seasonally adjusted annual rate of 1.178 million units.
Existing Home Sales, Prices Fall
Investor's Business Daily (11/29/07) P. A1The National Association of Realtors says the number of resale homes and condominiums changing hands fell for the eighth consecutive month in October, down 1.7 percent to an annual pace of 4.97 million. Year-over-year, the U.S. median home price slipped 5.1 percent, as high-end home sales were hit hard by weakness in the jumbo-loan market. NAR also reports an increase in housing inventory last month to a 10.8-month supply.
Real Estate Still Sluggish, Report Says
American Banker (11/29/07) P. 18; Sloan, StevenThe Federal Reserve Beige Book report issued on Nov. 28 finds that the residential property market continues to be "quite depressed." The economic survey points to decreases in consumer-loan credit quality, a surge in mortgage delinquencies, tighter underwriting standards and a drop in demand for mortgage refinancing and other loans. However, the Dallas and Richmond districts expressed increased optimism among lenders; and the New York Fed reported higher condominium sales. Meanwhile, the Kansas City and Denver districts saw housing inventories decline.
Fannie, Freddie Share Prices Hit 10-Year Lows
Washington Post (11/20/07) P. D4; Tyson, JamesInvestors concerned about increasing losses from mortgage defaults sent stock in Fannie Mae and Freddie Mac to the lowest level in 10 years. Shares of Fannie Mac closed at $37.58 for a decline of 7.6 percent and those of Freddie Mac ended the day at $37.50, down 7.9 percent, as both mortgage finance giants saw their stocks slip to their lowest prices since 1997. Investors are uncertain how many bad loans Freddie Mac and Fannie Mae own or have guaranteed. On Nov. 9, 2007, Fannie Mae said conditions in the housing market were responsible for the doubling of its net loss in the third quarter; and a Credit Suisse analyst has warned that Freddie Mac may be forced to deplete some of its excess capital to cover losses and pay a dividend.
Builders' Outlook Still Gloomy
Chicago Tribune (11/20/07)The National Association of Home Builders (NAHB) reports that the index of industry confidence compiled by it and Wells Fargo & Co. held steady at 19 for the second consecutive month--the lowest level since the two organizations began keeping records 22 years ago. A score of under 50 means that a majority of respondents view conditions as unfavorable. Economists explain that mounting foreclosures in many markets are adding to the glut of homes on the selling block, which means the construction slump will continue to have a negative effect on the U.S. economy well into the new year. NAHB President Brian Catalde states, "Sales incentives are having limited success in terms of getting buyers in the door," adding that reports of declining home prices "are dissuading buyers and fueling unrealistic expectations regarding home-price discounts."
Fallout From Credit Crunch Creates Another One
Washington Post (11/20/07) P. D1; Irwin, Neil; Tse, Tomoeh MurakamiA recent report by Goldman Sachs predicts $400 billion in losses tied to mortgage foreclosures--which ultimately could shrink the amount of money available to borrowers of home, commercial real estate and other consumer loans as banks dip into their capital to cover these losses. While the credit crunch has eased a bit from August, investors are increasingly worried about potential losses and are viewing mortgage- and commercial-real-estate backed securities and other types of debt as riskier than originally thought, demanding higher interest rates in response. Analysts and investors believe the Federal Reserve will slash interest rates only if negative economic reports are released, and concerns are being generated by the future markets pointing to a 20-percent chance of a 0.5 percentage point or larger decrease in interest rates when policymakers gather next month. According to former Fed Gov. Laurence Meyer, "The general point is that the current circumstances are marked by sizable losses on credit positions, with no one quite sure of what the eventual magnitude of those losses will be or where they are located. That raises the possibility of financial markets becoming more turbulent."
Bills Would Let Judges Remake Mortgages
Washington Post (11/20/07) P. D1; ElBoghdady, DinaBankruptcy court judges would be able to amend the loan terms of borrowers at risk of foreclosure, according to a new bill that has been the subject of two House hearings; similar legislation that has been introduced in the Senate. Supporters say loan modification is needed because it could keep half a million people from losing their homes; but lenders say it would increase risks as judges reduce the principal balance of loans to homes' "fair market value," with the rest being treated as unsecured debt that borrowers pay little or none of. According to Kurt Pfotenhauer of the Mortgage Bankers Association, lenders would be forced to require larger down payments, charge higher interest rates and become more selective about borrowers. Republicans plan to address the concerns of the mortgage banking industry by sponsoring bills that would limit modifications to borrowers whose loans were made in a certain period.
Thursday, November 8, 2007
Investors Find Silver Lining in Real Estate Market
As Home Foreclosure Rate Soars, Buyers Flock to Grab Distressed Properties
By EMILY FRIEDMAN
Nov. 2, 2007 —
The news about the U.S. housing market has been pretty bad -- foreclosures are up at twice last year's rate, affecting one in every 196 households.
But for an intrepid group of investors and prospective homeowners, foreclosures spell opportunity.
"When we get this wave of foreclosures due to the collapse of the subprime, more consumers start looking at foreclosed real estate auction markets as an avenue for taking advantage of the market," said Crystal Wright, a representative of Hudson & Marshall, one of the largest real estate auction firms for foreclosed properties. "It's the silver lining in a depressed real estate market for the average real estate buyer."
Home auctions, held throughout the country, resell properties that have been repossessed by banks when owners fail to make good on their mortgages. That's been happening at a record clip as homeowners with spotty credit who bought with little or no money down have had their adjustable rate mortgages increased beyond what they can afford to pay.
And because lenders want to avoid the cost associated with holding on to an empty home for months, they are more willing to lower the asking price in order to sell it quickly. In turn, buyers are finding firesale prices at foreclosure auctions.
"There is some positive in the whole doom and gloom of the housing market, in that buyers who have been shut out of the market in the last five years now have an opportunity to buy a home and realize the dream of ownership or upgrade to bigger homes," Wright told ABCNEWS.com. "And nobody likes to see a home on their block sit empty."
Business has been better than ever lately, thanks to buyers who realize this as their chance to invest, said Robert Friedman, chairman of the Real Estate Disposition Group, a firm that organizes foreclosure auctions.
"It's a rare situation where rates are low and prices are low," said Friedman. "There's just a lot of lenders out there with a lot of inventory that they'd rather sell at a low price quickly, so they're using the auction method. This is a fantastic opportunity for [buyers]."
Realtybid.com, a Web site that auctions foreclosed homes only online, said business has tripled over the past six months, and predict that it will double again by the end of the year.
"Foreclosure auctions ... help the communities rebuild and gets inventory off the market," said Realtybid.com CEO Tony Isbell.
But some real estate analysts aren't as optimistic and warn that not all properties purchased in foreclosure will make a profit for the buyer -- much like they didn't for the first.
"We're in for some challenging times ahead, and I think opportunities are relative," said Charles Cohen, CEO of Cohen Brother's Reality Corp., a real estate investment firm in Philadelphia. "If it didn't work for the primary buyer, it's not necessarily going to work for the second buyer, the opportunist. I'd say buyer beware, and know there's jeopardy all around."
Experts do warn buyers to make sure the auctioned home has no outstanding liens or back taxes, and reminds consumers to expect that the properties will need work.
Foreign Investors Find Opportunities Here
And it's not just U.S. residents who are finding windows of opportunity in a seemingly defunct real estate market. Foreign investors, too, are leaping at the chance to get a piece of a real estate market that has long been one of the priciest.
With a weak U.S. dollar and consequentially better exchange rates, more foreign investors are entering the American real estate market just as Americans themselves are doing quite the opposite -- shying away from the market and struggling with their mortgage payments.
"We see a lot of foreign buyers because of the weak dollar," said Pamela Liebman, the CEO of Corcoran real estate company in New York, who said the majority of investors come from the United Kingdom, Italy and Korea. "We're on sale for them; they have a lot of buying power."
Liebman told ABCNEWS.com that so many foreign buyers are taking advantage of the American market that her company has expanded its international reach, sending more brokers overseas to tend to customers. This year, Liebman said, real estate has seen the largest influx of foreign buyers in years.
With experts predicting even more foreclosures in the months to come, consumers may find even more ways to profit from a faltering market in the months to come.
By EMILY FRIEDMAN
Nov. 2, 2007 —
The news about the U.S. housing market has been pretty bad -- foreclosures are up at twice last year's rate, affecting one in every 196 households.
But for an intrepid group of investors and prospective homeowners, foreclosures spell opportunity.
"When we get this wave of foreclosures due to the collapse of the subprime, more consumers start looking at foreclosed real estate auction markets as an avenue for taking advantage of the market," said Crystal Wright, a representative of Hudson & Marshall, one of the largest real estate auction firms for foreclosed properties. "It's the silver lining in a depressed real estate market for the average real estate buyer."
Home auctions, held throughout the country, resell properties that have been repossessed by banks when owners fail to make good on their mortgages. That's been happening at a record clip as homeowners with spotty credit who bought with little or no money down have had their adjustable rate mortgages increased beyond what they can afford to pay.
And because lenders want to avoid the cost associated with holding on to an empty home for months, they are more willing to lower the asking price in order to sell it quickly. In turn, buyers are finding firesale prices at foreclosure auctions.
"There is some positive in the whole doom and gloom of the housing market, in that buyers who have been shut out of the market in the last five years now have an opportunity to buy a home and realize the dream of ownership or upgrade to bigger homes," Wright told ABCNEWS.com. "And nobody likes to see a home on their block sit empty."
Business has been better than ever lately, thanks to buyers who realize this as their chance to invest, said Robert Friedman, chairman of the Real Estate Disposition Group, a firm that organizes foreclosure auctions.
"It's a rare situation where rates are low and prices are low," said Friedman. "There's just a lot of lenders out there with a lot of inventory that they'd rather sell at a low price quickly, so they're using the auction method. This is a fantastic opportunity for [buyers]."
Realtybid.com, a Web site that auctions foreclosed homes only online, said business has tripled over the past six months, and predict that it will double again by the end of the year.
"Foreclosure auctions ... help the communities rebuild and gets inventory off the market," said Realtybid.com CEO Tony Isbell.
But some real estate analysts aren't as optimistic and warn that not all properties purchased in foreclosure will make a profit for the buyer -- much like they didn't for the first.
"We're in for some challenging times ahead, and I think opportunities are relative," said Charles Cohen, CEO of Cohen Brother's Reality Corp., a real estate investment firm in Philadelphia. "If it didn't work for the primary buyer, it's not necessarily going to work for the second buyer, the opportunist. I'd say buyer beware, and know there's jeopardy all around."
Experts do warn buyers to make sure the auctioned home has no outstanding liens or back taxes, and reminds consumers to expect that the properties will need work.
Foreign Investors Find Opportunities Here
And it's not just U.S. residents who are finding windows of opportunity in a seemingly defunct real estate market. Foreign investors, too, are leaping at the chance to get a piece of a real estate market that has long been one of the priciest.
With a weak U.S. dollar and consequentially better exchange rates, more foreign investors are entering the American real estate market just as Americans themselves are doing quite the opposite -- shying away from the market and struggling with their mortgage payments.
"We see a lot of foreign buyers because of the weak dollar," said Pamela Liebman, the CEO of Corcoran real estate company in New York, who said the majority of investors come from the United Kingdom, Italy and Korea. "We're on sale for them; they have a lot of buying power."
Liebman told ABCNEWS.com that so many foreign buyers are taking advantage of the American market that her company has expanded its international reach, sending more brokers overseas to tend to customers. This year, Liebman said, real estate has seen the largest influx of foreign buyers in years.
With experts predicting even more foreclosures in the months to come, consumers may find even more ways to profit from a faltering market in the months to come.
Sunday, November 4, 2007
Lewes-area housing issue heats up
Posted Sunday, November 4, 2007 at 6:24 am
Many residents of Henlopen Landing have decided that living next to a town house complex wouldn't be a very good idea.
Less than three weeks after homeowners in the Lewes-area development appeared resigned to seeing 138 town houses built at Plantation and Beaver Dam roads, they turned out more than a dozen strong to urge Sussex County Council to reject the project. They presented council with a petition, bearing 87 names, of community opposition to Bridle Ridge Properties L.L.C.'s proposal to build the units where single, detached homes -- like those in Henlopen Landing -- had been promised.
Bridle Ridge Properties also is the developer of Henlopen Landing, which is recorded as a 277-lot subdivision. Forty-six of the lots have yet to be created. The firm wants to scrap plans for those lots and combine the land they would occupy with another parcel, which is next to the subdivision, to form a 29-acre location for the proposed town houses.
The company's change of heart amounts to a "breach of trust," resident Bob Steinback told the council, which tabled the case after listening to about 90 minutes of testimony on Tuesday. The council can't vote on the proposal until the Sussex Planning & Zoning commission issues a recommendation.
Steinback, who spoke in support of the project during a lightly attended hearing before the planning-and-zoning Commission Oct. 11, said he joined the opposition after studying property-deed covenants that implied Henlopen Landing would contain only single homes. Bridle Ridge Properties is obligated to follow through on those agreements, he argued.
Another resident, Ed Mucha, said, "Our dream was to retire at the beach in a nice single-family community. We thought we had found it at Henlopen Landing."
Mucha called on the council to "stand up for the little guy."
But Preston Dyer, a partner in Bridle Ridge Properties, contended the town house complex would offer advantages that single homes would not -- greater community open space, for instance. Additionally, the town house owners would pay for all maintenance of a main street they would share with the existing residents, and the town house community would maintain a pond that would help improve drainage around existing homes.
Besides, Dyer said, building town houses on the tract next to Henlopen Landing would ensure that a busy store like the nearby Lowe's isn't developed there.
But Councilman George Cole emphasized that that land isn't zoned to contain a store or other commercial enterprise.
Thursday, November 1, 2007
Homeowners urged to prepare for crises
Preventive steps can minimize disasters' damageBy EILEEN ALT POWELL, Associated Press
Posted Thursday, November 1, 2007Read Comments-->
Wildfires that destroyed more than 500,000 acres in California last month devastated homeowners lacking enough insurance to cover the damage. AP file 11/01/2007 -->
NEW YORK -- The televised images of homes collapsing in wind-driven wildfires in California should serve as a reminder that disasters can happen just about anywhere in the United States and that homeowners need to be prepared.
But many aren't, experts say.
"When we go into areas to do disaster investigations with our engineers, we find people didn't think it would happen to them or they had put any preventative steps on their to-do list for next year," said Wendy Rose, spokeswoman for the insurance industry-funded Institute for Business & Home Safety in Tampa, Fla.
"It's true whether you're talking about wildfires or flooding or hurricanes," she said, adding that there can be major financial consequences for the unprepared.
The California wildfires, fed by drought and fierce, dry winds, forced half a million people to flee their communities, burned more than 500,000 acres and destroyed some 2,000 houses. Insured losses could exceed $1 billion, according to risk assessment firms.
Families need to evaluate their insurance coverage and think about the physical changes they may need to make to their home and surroundings to keep them safe.
Consumers need to buy special insurance policies for floods and earthquakes, but fire and smoke damage are covered under standard homeowners, renters and business insurance policies, said Jeanne M. Salvatore of the Insurance Information Institute in New York. Fire damage also is covered by the comprehensive section of auto insurance policies, she said. But many people fail to get enough coverage, she said.
"Pick up the phone and call your insurance agent and ask the key question, 'Do I have enough insurance to completely rebuild my home if it burned to the ground?' " Salvatore said. If the answer is "no," the homeowner may need to buy more.
She said the contents typically are insured for 50 percent to 70 percent of the value of the home.
"You can buy more, especially if you have items like antiques or collections, and the best way to determine that is to do a home inventory," Salvatore said.
George Yates, an insurance agent in East Hampton, N.Y., and a member of the Independent Insurance Agents and Brokers of New York, said consumers need to be aware there are limits on payouts on some policies -- which may mean there's not enough money to cover reconstruction if there has been a major disaster.
"In most cases, the most insurance companies are going to pay is 125 percent of whatever they're insuring," he said. So someone with so-called extended replacement coverage on a $200,000 house might qualify for a maximum of $250,000.
"After a natural disaster, the costs of labor and materials can surge," he warned. "And there may not be enough there for people to be fully reimbursed."
Rose of the Institute for Business & Home Safety said homeowners also should do what they can to make their homes physically safe.
To try to minimize the threat of wildfires, "roll up your sleeves and do some work in your yard -- clear away brush, branches and other things that are too close to your house or hanging over your house," she said.
Posted Thursday, November 1, 2007Read Comments-->
Wildfires that destroyed more than 500,000 acres in California last month devastated homeowners lacking enough insurance to cover the damage. AP file 11/01/2007 -->
NEW YORK -- The televised images of homes collapsing in wind-driven wildfires in California should serve as a reminder that disasters can happen just about anywhere in the United States and that homeowners need to be prepared.
But many aren't, experts say.
"When we go into areas to do disaster investigations with our engineers, we find people didn't think it would happen to them or they had put any preventative steps on their to-do list for next year," said Wendy Rose, spokeswoman for the insurance industry-funded Institute for Business & Home Safety in Tampa, Fla.
"It's true whether you're talking about wildfires or flooding or hurricanes," she said, adding that there can be major financial consequences for the unprepared.
The California wildfires, fed by drought and fierce, dry winds, forced half a million people to flee their communities, burned more than 500,000 acres and destroyed some 2,000 houses. Insured losses could exceed $1 billion, according to risk assessment firms.
Families need to evaluate their insurance coverage and think about the physical changes they may need to make to their home and surroundings to keep them safe.
Consumers need to buy special insurance policies for floods and earthquakes, but fire and smoke damage are covered under standard homeowners, renters and business insurance policies, said Jeanne M. Salvatore of the Insurance Information Institute in New York. Fire damage also is covered by the comprehensive section of auto insurance policies, she said. But many people fail to get enough coverage, she said.
"Pick up the phone and call your insurance agent and ask the key question, 'Do I have enough insurance to completely rebuild my home if it burned to the ground?' " Salvatore said. If the answer is "no," the homeowner may need to buy more.
She said the contents typically are insured for 50 percent to 70 percent of the value of the home.
"You can buy more, especially if you have items like antiques or collections, and the best way to determine that is to do a home inventory," Salvatore said.
George Yates, an insurance agent in East Hampton, N.Y., and a member of the Independent Insurance Agents and Brokers of New York, said consumers need to be aware there are limits on payouts on some policies -- which may mean there's not enough money to cover reconstruction if there has been a major disaster.
"In most cases, the most insurance companies are going to pay is 125 percent of whatever they're insuring," he said. So someone with so-called extended replacement coverage on a $200,000 house might qualify for a maximum of $250,000.
"After a natural disaster, the costs of labor and materials can surge," he warned. "And there may not be enough there for people to be fully reimbursed."
Rose of the Institute for Business & Home Safety said homeowners also should do what they can to make their homes physically safe.
To try to minimize the threat of wildfires, "roll up your sleeves and do some work in your yard -- clear away brush, branches and other things that are too close to your house or hanging over your house," she said.
Foreclosure rates soar
By ALEX VEIGA, Associated Press
Posted Thursday, November 1, 2007 at 9:13 amRead Comments-->11/01/2007 -->
LOS ANGELES — A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said today.A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc.The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year.There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.All but five states reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said.A single property can sometimes receive more than one notice in a three-month period.In all, 635,159 filings were reported in the third quarter, up 99.5 percent from the year-ago quarter and up 30 percent from the second quarter of this year.RealtyTrac CEO James J. Saccacio said in a statement that August and September accounted for the highest monthly totals since the company began issuing foreclosure filing reports in January 2005.“Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets,” he said.Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.The loans were initially attractive options for buyers because of their cheaper “teaser” interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can’t afford to sell their homes after falling behind on payments.The three states with the highest foreclosure rates during the third quarter were Nevada, California and Florida, RealtyTrac said.Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties.That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the year-ago quarter.California led the nation in total foreclosure filings and reported one filing for every 88 households.The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times more than the year-ago period.In Florida, there were 86,465 foreclosure filings on 60,992 properties during the third quarter, RealtyTrac said. Foreclosure filings rose 51.5 percent from the previous quarter and more than doubled from the same quarter last year.Florida’s foreclosure rate amounted to one filing for every 95 households, RealtyTrac said.Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
Posted Thursday, November 1, 2007 at 9:13 amRead Comments-->11/01/2007 -->
LOS ANGELES — A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said today.A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc.The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year.There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.All but five states reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said.A single property can sometimes receive more than one notice in a three-month period.In all, 635,159 filings were reported in the third quarter, up 99.5 percent from the year-ago quarter and up 30 percent from the second quarter of this year.RealtyTrac CEO James J. Saccacio said in a statement that August and September accounted for the highest monthly totals since the company began issuing foreclosure filing reports in January 2005.“Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets,” he said.Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.The loans were initially attractive options for buyers because of their cheaper “teaser” interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can’t afford to sell their homes after falling behind on payments.The three states with the highest foreclosure rates during the third quarter were Nevada, California and Florida, RealtyTrac said.Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties.That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the year-ago quarter.California led the nation in total foreclosure filings and reported one filing for every 88 households.The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times more than the year-ago period.In Florida, there were 86,465 foreclosure filings on 60,992 properties during the third quarter, RealtyTrac said. Foreclosure filings rose 51.5 percent from the previous quarter and more than doubled from the same quarter last year.Florida’s foreclosure rate amounted to one filing for every 95 households, RealtyTrac said.Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
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